The Amendment
Back in July of 2010, when President Obama signed into law the Dodd-Frank Financial Reform Act, merchant lobbyists such as the National Retail Federation hailed it as a huge win for retailers and small businesses in general. But in the wake of Sen. Dick Durbin's Amendment to Dodd-Frank, which transfers the power to set interchange rates on debit cards from the card associations to the Federal Reserve, many are now wondering if there may be unintended consequences on the horizon.
According to the Independent Community Bankers of America, many small banks are poised to reduce customer access to debit cards, and compensate for their expected losses from debit card revenue by raising account fees. Just what we need. With high levels of unemployment and rising costs of food and consumer goods, increased banking fees (not just to merchants - but to consumers as well - the ones the merchants were claiming to want to help) are the last thing families should have to worry about!
The Costs
Fearing potential revenue losses of anywhere from 60-80%, banks are naturally looking for other ways to compensate. Ways they would reduce access to debit include raising the minimum qualification standards, and, closing higher-risk accounts (e.g. by using credit scores). New checking account changes would include doing away with free checking and raising minimum balance requirements and fees across the board.
Is this what merchants want? I doubt it. Of course merchants want to pay the lowest interchange rates possible, but it's unlikely they want to pay the price of being seen by their customers as the cause of unfriendly consumer checking accounts. This could easily end up being seen as more of a "side effect" of a bad prescription than a remedy for the original problem.
Article Source: http://EzineArticles.com/?expert=Virgil_Stanphill
Back in July of 2010, when President Obama signed into law the Dodd-Frank Financial Reform Act, merchant lobbyists such as the National Retail Federation hailed it as a huge win for retailers and small businesses in general. But in the wake of Sen. Dick Durbin's Amendment to Dodd-Frank, which transfers the power to set interchange rates on debit cards from the card associations to the Federal Reserve, many are now wondering if there may be unintended consequences on the horizon.
According to the Independent Community Bankers of America, many small banks are poised to reduce customer access to debit cards, and compensate for their expected losses from debit card revenue by raising account fees. Just what we need. With high levels of unemployment and rising costs of food and consumer goods, increased banking fees (not just to merchants - but to consumers as well - the ones the merchants were claiming to want to help) are the last thing families should have to worry about!
The Costs
Fearing potential revenue losses of anywhere from 60-80%, banks are naturally looking for other ways to compensate. Ways they would reduce access to debit include raising the minimum qualification standards, and, closing higher-risk accounts (e.g. by using credit scores). New checking account changes would include doing away with free checking and raising minimum balance requirements and fees across the board.
Is this what merchants want? I doubt it. Of course merchants want to pay the lowest interchange rates possible, but it's unlikely they want to pay the price of being seen by their customers as the cause of unfriendly consumer checking accounts. This could easily end up being seen as more of a "side effect" of a bad prescription than a remedy for the original problem.
Article Source: http://EzineArticles.com/?expert=Virgil_Stanphill
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